Special to The Globe and Mail
Published Friday, May 20, 2016
What do you get when you combine orphaned oil and gas wells, nanotechnology, 3-D printing and a bunch of really smart geologists? Throw in a government committed to eliminating carbon-fired electricity, and you get the perfect conditions for some mind-blowing innovation in power generation.
Geologists and engineers at the University of Alberta are developing something called “low temperature micro-geothermal engines.” It may be an awkward name, but what they’re working on could be an innovative breakthrough for Alberta’s power generation aspirations. The provincial government has announced intentions to eliminate all coal-fired power by 2020 – an aggressive goal that has been applauded by many. Yet the question of how we are going to get there looms large over an economy mired in recession.
The geothermal engines at the U of A are basically a redesign of something that’s been around for more than two centuries: the external combustion engine. Using nanotechnology – which enables scientists to construct things at the molecular level – the engines can be designed to be about the size of an inflatable kids’ pool and a couple of metres high. In the words of Dr. Jonathan Banks, the geologist and lead researcher at the university, “we’re going to optimize the bejeezus out of it” using nanotechnology.
Built at the molecular level using 3-D printing, the units would be placed atop orphaned oil and gas wells – something Alberta has in abundance – pulling up boiling hot brine water from more than two kilometres below the Earth’s surface. Unlike natural gas, which loses a tremendous amount of heat while it is being brought to the surface, water loses very little of its heat energy while it’s pulled to the surface. The water’s heat can be converted to electricity by the micro-geothermal units, and pushed onto the grid.
No carbon. No nuclear waste. No ruined caribou habitat.
One engine could produce enough electricity to power 100 homes. And the best part of it is that using 3-D printing, the cost of producing one will be a few hundred thousand dollars, not millions or billions. They’d be compact, easy to install and simple to connect to the electricity grid.
If this innovation had taken place at the University of Copenhagen, we’d think “Oh those Danes are so clever!” If it had been in China, we would say “There goes China again, eating our lunch on innovation.” But it’s happening right here in Canada – and our response is dangerously close to a yawn. Few Canadians are even talking about the technology or the enormous opportunities it creates for geothermal energy.
There are at least two reasons why we should be jumping for joy at the prospect. The first is the potential for the province to replace coal – at least partly – as the largest source of electricity generation. That could go a long way in improving Alberta’s image, which has suffered in a world at war with carbon.
But the second reason is even more important, at least economically. The development and innovation of such power systems here in our own backyard provide the opportunity to sell the technology to the rest of the world – a world that is also keen to move away from coal, hydrocarbons and nuclear. That can provide long-lasting labour market opportunities and could help establish Alberta as a leader in renewable energy.
There are many definitions of “innovation,” but the one I use is this: the application of an existing technology to a new and very useful purpose. Here we are seeing true innovation take shape. For a very long time, it seems nanotechnology has been an invention waiting for something useful to do. But now we are seeing the emergence of something not only useful, but crucial to solving our power needs.
We need to be innovative, but we also need to recognize and capitalize on innovation when it happens. The advances in nanotechnology, 3-D printing and geology must not remain trapped in university labs. Commercializing the technology is the next step, but this is where Canadians have often fallen short. We’ve innovated something amazing – now let’s capitalize on it.
Todd Hirsch is the Calgary-based chief economist of ATB Financial and author of The Boiling Frog Dilemma: Saving Canada from Economic Decline.
Special to The Globe and Mail
Published Friday, May 06, 2016
Since the end of the global recession in 2010, one question has loomed over economic and central banking conferences: What happened to growth?
From emerging markets to the wealthy, industrialized countries, the pace of economic expansion has failed to impress.
It wasn’t supposed to be this way. The BRICS had held out such bright hope as beacons of global growth, continuing to lift commodity prices and consumer markets for everything from Coca-Cola to new iPhones. But these hopes were always pinned to a flimsy premise. Now, at least two of the BRICS are in recession, and forecasts for the other three have consistently been scaled back.
Europe and North America are in better shape than they were in 2010. But surely with the amount of fiscal and monetary stimulus they’ve seen, one could reasonably expect more. Even the bold experiments with negative interest rates in Japan and Europe are failing to do much.
Here in Canada, the federal government has struck a task force of impressive economists to provide ideas for how Ottawa can pump up the country’s growth rate. Meanwhile, the Bank of Canada Governor is suggesting slow economic growth may be the new normal. The gains from liberalized global trade that supercharged growth in the past have largely been exploited.
And even this week, equity markets swooned and oil prices dropped – all on fears that global GDP growth is disappointingly slow.
But an interesting question comes out of all this. Are we unduly obsessed with growth as measured by the real GDP? It is, after all, a very imprecise tool to gauge progress. (Full disclosure: I lead an economics group at a financial institution, and the first indicator we forecast each quarter? Growth in the real GDP!)
The system of national accounts that measures the GDP was a product of the post-WWI world, when factory production and agricultural output were the primary economic drivers. How many new cars or tanks or bushels of wheat are produced is easy to count.
But in 2016, the service sector has taken a much larger role. How do you measure output when the banking, entertainment, communications and travel sectors are evolving so quickly? If more people are staying home to watch streaming video content rather than spending $40 at a theatre, it counts as a drop in the GDP. But we are not worse off.
Then there’s the rise of the “sharing economy,” which throws another wrench into how we measure economic activity. Car sharing, Airbnb, community vegetable gardens – increasingly, consumers are less interested in buying and owning things they use only occasionally. Why buy a drill that you’ll use five times a year when you can borrow one at a tool library? Sharing a drill is bad for the real GDP but, clearly, consumers are not worse off. In fact, they are better off.
Even worse, the GDP also counts bad things as positive. Natural disasters, such as tsunamis, earthquakes and ice storms, stimulate all sorts of spending in the form of rebuilding. This boosts the real GDP, but clearly we’d be better off had the disaster not happened.
Why do we want economic growth at all? Broadly speaking, there are two reasons.
The first is that a growing economy usually creates new jobs. The second is that it creates revenue for pension funds and government coffers. And these two are intricately connected in a self-reinforcing feedback loop. The more jobs, the more revenue and income, which helps create new jobs, and so on.
But is an expansion of the real GDP actually necessary to create new jobs and provide a growing standard of living? That’s a more complicated question that requires a fundamental rethink of traditional economics.
Rather than chasing our tails with an endless obsession over the real GDP, perhaps economists and policy wonks would be of greater service targeting those metrics that actually do promote job creation and prosperity. Education levels, preventative health care, environmental well-being, innovation and R&D … all of these help create new jobs, which in turn generate revenue for governments.
But they may or may not directly boost the size of the economy – at least not as measured by the real GDP.
Todd Hirsch is the Calgary-based chief economist of ATB Financial, and author of The Boiling Frog Dilemma: Saving Canada from Economic Decline.